What Happens if I Can Only Make a Partial Payment on My Mortgage?

If you are facing financial difficulties and can only make a partial payment on your mortgage, several important actions and implications may arise:

Understanding the Consequences

Late Fees: Most lenders will impose late fees if your payment is not made by the due date. These fees can vary depending on the lender's policies. Impact on Credit Score: A payment that is late by 30 days or more may be reported to credit bureaus, negatively impacting your credit score. Loan Default and Foreclosure: Consistently making partial payments can lead to mortgage default. Lenders may then initiate foreclosure proceedings, potentially resulting in the loss of your home. Communication with Lender: It is crucial to communicate with your lender if you foresee only being able to make partial payments. They may offer options such as loan modification, forbearance, or a repayment plan. Escrow Accounts: If you have an escrow account for property taxes and insurance, making only partial payments can lead to shortfalls in these funds. Legal Implications: Depending on the terms of your mortgage agreement, failing to pay the full amount could result in legal repercussions.

It is imperative to contact your mortgage lender as soon as possible to explain your situation. Lenders often prefer to have you as a continuing customer rather than facing default.

Recommendations

Contact Your Lender: A lender may add the unpaid portion back onto your loan with some fees. This is the recommended course of action. Partial Payment Impact: While a lender may not accept a partial payment, you should contact the lender to seek extensions or other payment arrangements. Recording the conversation can be helpful. Bimonthly Payment Plan: Consider switching to a bimonthly plan based on your paydays. Automating payments can ensure timely payments. If you cannot afford the payments, create a budget and eliminate unnecessary expenses. Housing Counselor or Financial Advisor: If you are facing financial difficulties, seek advice from a housing counselor or financial advisor to explore additional options.

Steps to Take

Call Your Lender: Contact your mortgage service company before the payment is late or missed. Discuss options for forbearance, modification, or other payment arrangements. Call Recording: Record the conversation for your records. This can provide proof of the conversation if issues arise later. Customer Service Representatives: Be prepared to speak with several customer service representatives who may not be fully informed. If the situation escalates, the call may shift to a supervisor who may have more authority.

The bottom line is that your lender wants to help you continue as a customer. They will not benefit from you falling behind on payments, so they will be motivated to find a solution.

Remember, seeking advice early and communicating effectively with your lender can help prevent further complications and preserve your financial health.